Why does the myth persist that Reagan ran up the deficit?

[freetobegay]

He made a deal with the Democrats that controlled congress that they would cut spending, but they ignored him and spent more. The Reagan tax cuts actually increased revenue as the economy grew, but the Democrats spent it and more. I know it makes good cover copy to claim otherwise, but the myth is not true.


P.S. before I get flamed to hell & back, that was sent to me in an e-mail I am not quite sure what my response should be.

[burrowowl]

1. Tell them to read

Kevin Phillips 'wealth and Democracy'. KP was or still is a Republican.
His book is very indicting of the 'neo-cons'.

[Catt03]

34. Phillips book is the best

It tells the whole story. Great resource.

[Delano]

2. You might remind them that Reagan NEVER submitted...

...a balanced budget to congress. And he never met a slab of military pork he didn't like...

The tax cuts increased revenue, but the deficit grew much faster than revenue, and deficit as a percentage of GDP rose throughout Reagan/Bush, falling under Clinton. Clinton also ran the smallest government in 50 years.

[displacedtexan]

13. Two Words

Star Wars

[NewYorkerfromMass]

20. One word really:

Pentagon

[Nlighten1]

24. Ding ding ding

We have a winner.

[kodi]

32. the tax cuts did not produce higher revenues until years later

the intial screeds by the gop was that the tax cuts of '82 would bring about increased tax revenues within a year. it took three years for such to happen, and even then, when adjusted for inflation, it took 4 years for them to produce an increase in tax revenues.

considering the historical cyclic nature of the US economy, those increases in tax revenues would have almost certainly occured without the tax cuts.

in the mean time, the social safety net was torn asunder as a result of the tax cuts.

the rich got richer, the poor, poorer.

same as it ever was.

[AP]

36. Reagan also devolved HUGE SWATHS of Fed responsibilities to the states

which drove up state taxes (which were made up through a greater variety of regressive taxation -- the Feds primarily use income tax, but states and local gov'ts can use sales tax and licensing fees).

It wasn't so much political power he devolved as it was responsibility to pay for programs that the federal government had previoulsy been responsible for.

[bluestateguy]

3. reply

Tax revenues go up almost every year, that was no accomplishment. As for the spending cuts, it is true that Democrats stopped any truly major reductions in social welfare spending proposed by Reagan, but by his second term he gave up even trying to reduce social welfare expenditures. In 1981 his proposal to overhaul social security was rejected by the senate, 95-0 (note: there were not 95 Democrats in the Senate). Also, his defense buildup dwarfed any proposed cuts to domestic programs.

[Toots]

11. In fact during Reagan's term Republicans controlled the Senate

Everything that comes from the GOP is myth and lies like the Democrats controlled Congress for forty years prior to 1994.

[JamesA1102]

18. Please during Reagan's term the military

spending was increase to where it was over 25% of the federal budget. Major anti-poverty programs were slashed to less than 12% of the federal budget.

[freetobegay]

4. Thanks for your input.

I am going to compile the three together.

[bowens43]

5. Revenues increased because

taxes INCREASED in 6 out of the 8 years that ronnie raygun was on office. There was a net increase in taxes during his presidency.

[leftyandproud]

6. to be fair..

Reagan cut taxes MUCH more than he raised them...Remember, he dropped the 70% bracket down to 28%...and every other bracket went down around 25% from their starting levels...this was a massive, MASSIVE tax reduction...and when he compromised with the dems on the little 2% hike in social security taxes, it really didn't come close to reversing the level of tax reduction he pushed through. The damage he did can not be seen..because he eliminated what COULD HAVE BEEN. Activist government was effectively killed by this one man.

[notbush]

7. But the actual $ coming into the government

went up by 53%
but spending went up even more.George M. didn't keep his end of the deal.
That's not pro-Reagan or anti-Reagaan...It's the truth.....

[leftyandproud]

8. George M. didn't keep his end of the deal?

why should he have??
reagan wanted to starve people...I'm glad the dems fought for more spending on the important things...it's the military waste that should have been reduced, and SDI was a joke

[Racenut20]

12. The next year they passed the biggest tax increase ever

[mhr]

21. Maybe, But He Increased Payroll Taxes Substantially!

The Rich Got Richer Just Like Under GW and The Middle Class Got Screwed Just Like Under GW.

Let's Keep The Facts Straight Here Folks!

[Art_from_Ark]

9. The Republicans controlled the Senate from 1981-1987

and there were enough "boll weevil" "Democrats" (that is, from the Zell Miller branch of the party) in the House at the time who effectively negated the Democratic majority in the House by siding with the Repugs on just about everything.

[izzie]

10. He spent on the military as I recall.

This was when the USSR was really falling but of course he never told us that. I do think the man was ill long before he told us and others had to much power with much going on that was not on the books. Like his little wars in Cen. Am. and the help to put down east Temor. We may not have had out army in some places but we seemed to back these things.He also did a job on the unions. I frankly did not think he was a good president for working people. I got a good laugh out of the old Bush's talking as I heard them say before that once in 8 years they were asked to the private part of the WH to be with Reagan and were up-tight about it. Bush changed his views to get on the ticket with Reagan but no one brings that up now.As with Nixon or any one that passes on we do like to recall the good times and we are doing that now. I see nothing wrong with that.

[JCMach1]

14. It was Reagan's programs that sank the budget

nothing else....

[keithyboy]

15. Why were deficits cut under Clinton, spending more than Reagan?

You can start there. One answer is how they distributed the tax cuts. And Clinton actually presided over a "smaller" government than any Republican in the last 40 years (meaning that Federal employment rolls were actually reduced).

[keithyboy]

16. It amazes me that "optomistic" and "patriotic" can actully be applied to

a man who said the vilest things about and tried to get people to hate their own government. :shrug:

[sendero]

17. Please...

... what Reagan did was simple. He instituted wartime spending during peacetime. It was the Dems who funnelled those billions and billions to defense contractors? Give me a break.

[mhr]

23. It Was The Policy At The Time To Outspend The Soviets On Defense

In That Regard The Dems And Repugs Worked Together.

Let's Keep The Facts Straight Here Folks!

[sendero]

30. Nonsense...

... it was REAGAN's policy to do so. I'm sure a few Dems went along for the ride but to deny it was Reagan's policy and idea is nonsense.

Reagan did it for two reasons. One, it put pressure on the Soviets. And two, less discussed is that it pulled our country out of recession by implementing a wartime economy during peacetime. Those defense dollars translated into jobs, not all were just shareholder profits, and even those that were filtered into the economy.

Had he not had to engage in massive deficit spending to acheive this, it would have been quite a feat.

[mhr]

43. Ahh, You Forget Tip O'Neil And The Joint Deal He Made With Reagan

It was a joint policy, not Reagan's alone.

Let's get the facts staright here.

BTW, I personally believe that Tip made a deal with the devil. But that is subject for a different thread.

[sendero]

48. It was a joint policy.....

... where Reagan got his defense spending and Tip got some spending of his own. There is no other kind of "joint" deal.

[Selwynn]

19. In the words of Dr. Cox from Scrubs.....

<sung to the tune of the clock chimes>

WRONG WRONG WRONG WRONG....

WRONG WRONG WRONG WRONG....YOU'RE WRONG..... YOU'RE WRONG.... YOU'RE WRONG....

:D

[Nlighten1]

22. Actually, the republicans repealed Reagan's tax cuts.

Specifically, this repeal was lead by none other than Bob Dole. The Right loves to claim Reagan as a hero but when he was in office the Repubs gave him a bit of hell.

[Tatiana]

46. Not just Republicans, but TRUE conservatives.

Today's Republicans are not conservatives - we've given them the term "neo-conservatives." They aren't concerned with a balanced budget. However, back then there were many true conservatives in the Republican party, Bob Dole among them.

[mhr]

25. Let's Not Forget What Bush Senior Said About Reagan's Economic Policies

VOODOO Economics!

Sure wish he would talk to his son!

[snippy]

26. Several republican lies to be addressed here.

First, the democrats did not control Congress during all of Reagan's presidency.

"During the first six Reagan years (FY1982-87) the Senate was controlled by Republicans and the House by Democrats.In the final two years of Reagan’s presidency the House and Senate had Democrat majorities."

http://64.233.167.104/search?q=cache:K7AwwDcu0qcJ:www.ipi.org/ipi%255CIPIPublications.nsf/0/4D0C4F5676D56DA1862567F40051B077/%24File/reagandf.pdf%3FOpenElement+house+senate+control+1982-1989&hl=en

Second, Congress spent more than Reagan requested in 7 out of 8 years, including 5 of the 6 years that republicans controlled the Senate. In the 8 years of Reagan's presidency, Congress spent a total of $197.3 billion more than Reagan requested. That was 2.68% more than Reagan requested. The largest percentage increase ( 7.26%) and the largest dollar increase ($50.5 billion) in Congressional spending over Reagan's budget request was in 1982 when republicans controlled the Senate.

http://www.presidentreagan.info/reagan_budgets.cfm

Third, Reagan raised taxes 6 times and cut taxes 3 times.

"According to a recent Treasury Department study (http://www.ustreas.gov/ota/ota81.pdf), there have been 15 major tax bills since 1980. Of these, 11 were tax increases. Ronald Reagan, the arch tax cutter, signed into law 6 of them, including the Tax Equity and Fiscal Responsibility Act of 1982, one of the largest tax increases in history. And of the 4 tax cuts, only the Economic Recovery Act of 1981 was significant."

http://www.ncpa.org/press/bart030801.html (Congressional testimony of Bruce R. Bartlett, a supply side tax cutter)

The 1982 Reagan tax increase was the largest ever. Clinton's 1993 tax increase was the second largest.

"TEFRA was the biggest tax increase of the subperiod measured in constant dollars and as
a percentage of GDP. OBRA93 was the second biggest tax increase measured in constant dollars and as a percentage of GDP."

http://www.ustreas.gov/ota/ota81.pdf

Fourth, Reagan's tax cuts led to the smallest percentage increase in federal revenue since the depression. Much of the increses in revenue came from Reagan's increases.

"The argument that the near-doubling of revenues during Reagan's two terms proves the value of tax cuts is an old argument. It's also extremely flawed. At 99.6 percent, revenues did nearly double during the 80s. However, they had likewise doubled during EVERY SINGLE DECADE SINCE THE GREAT DEPRESSION! They went up 502.4% during the 40's, 134.5% during the 50's, 108.5% during the 60's, and 168.2% during the 70's. At 96.2 percent, they nearly doubled in the 90s as well. Hence, claiming that the Reagan tax cuts caused the doubling of revenues is like a rooster claiming credit for the dawn.

Furthermore, the receipts from individual income taxes (the only receipts directly affected by the tax cuts) went up only 91.3 percent during the 80's. Meanwhile, receipts from Social Insurance, which is directly affected by the FICA tax rate, went up 140.8 percent. This large increase was largely due to the fact that the FICA tax rate went up 25% from 6.13 to 7.65 percent of payroll. Hence, the claim that the doubling of TOTAL revenues proves the effectiveness of tax cuts is including revenues which resulted from a tax hike to prove the effectiveness of a tax cut. This seems like the height of hypocrisy."

http://home.netcom.com/~rdavis2/taxcuts.html

The annual revenue numbers by source can be found here. http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist02z1.xls

The increase in revenue from income taxes was consistent with historical patterns.

"Historically, revenue growth has closely tracked nominal GDP growth. Since 1963, for every one percent rise in nominal GDP, revenues have risen by 1.04 percent. Since the Tax Reform Act of 1986, the elasticity has been slightly higher at 1.18 percent. Since the 1993 tax rate increase, the elasticity has grown still more to 1.37 percent. In other words, since 1993 federal revenues have increased 37 percent faster than GDP. That is the reason why revenues as a share of GDP have risen from 17.6 percent in 1993 to 20.6 percent last year."

http://www.ncpa.org/press/bart030801.html

[JanMichael]

27. Glad you're just passing this on and not believing it! BTW Carter's budget

(Military) was essentially mimicked by Reagan in the total expendature department. Sure there were slightly different budget priorities but the atrocious spending was essentially the same.

[durutti]

28. Read this page:

http://www.huppi.com/kangaroo/L-demodeficit.htm

[phiddle]

29. It's NO myth; he did run up the deficit.

The '80 elections were a watershed. Not only did Reagan trounce Carter, but the Democrats lost the Senate, not to regain it until the '86 elections. Starting in '81 Bob Dole was chair of the Senate Finance Committe, and Pete Domenici of the Budget Committee. And, the election in the South of enough "Boll Weevil" Democrats, many of whom, like Phil Gramm would later switch parties, gave Reagan a working majority in the House, as well. Under this scenario, Reagan got pretty much what he wanted, cuts in a few social programs excepted, which would have effected the deficit only marginally. From a hazy memory, it unfolded like this:

Jimmy Carter, during the '80-81 transition handed Reagan a budget that projected a $6 billion deficit. Reagan took office, and immediately proposed a large cut in INCOME tax rates against the advice of his budget director, David Stockman. (Stockman told Reagan that there was no way that the tax cuts would raise the revenue that they were claiming, and that the result would be "deficits as far as the eye can see".)

Well, Reagan got his rate cuts. At the same time, a whole host of new military programs were instituted, many of them of dubious value (Star Wars). The combined result was that the 81-82 deficit was $150 Billion, as opposed to the $6 Billion projected by Carter.

And the deficit continued to climb over the next 4 years. And the fastest growing component of the budget was interest on the national debt, which grew from 3% to 12% during his 8 years. This was one of the most negative, and wholly avoidable results of his policies. Note that Reagan NEVER presented to Congress a balanced budget, that his own projections were for military spending to rise faster than cuts in social programs, and that deceptive budgeting (unrealistic growth and inflation assumptions, for example) began in earnest during his administration.

With the Greenspan (note the name) Commission as cover, Social Security taxes were raised, I believe right after the '84 elections, and constituting at that point the largest tax increase in history. THIS IS THE SOURCE OF THE MAJORITY OF THE REVENUE INCREASES to which you allude. Be very clear on this point: it was NOT that lower marginal income tax rates, benefitting mostly the wealthy, raised more revenue as a % of GDP. Rather, revenue increases were a result mainly of increased SS tax rates, falling heaviest on the poor and middle class.

In '86 the Bradley-Gephart tax simplication bill was passed. It eliminated literally thousands of deductions in return for yet lower marginal rates. But its effect on revenues and hence the deficitwas almost neutral (that's when the marginal rates went down in the 20% range), and the distribution of the total tax burden was largely unaffected.

The total result? All previous presidents, George Washington to Jimmy Carter, had run a combined debt of $1 trillion. Reagan's $1.9 trillion debt in his 8 years virtually tripled the national debt while shifting the tax burden downward, militarizing the economy, and burdening future generations with debt.

[0007]

40. Thanks for putting the Reagan myth in the right perspective

[mumon]

31. With all due respect, are they out of their mind?

The Democrats spent negligibly more in some years than Reagan wanted, most years the same or less.

"Reagan's tax cuts" didn't increase the rate of the economy. Graham-Rudman did.

And "Reagan's tax cuts" is another myth. Most people - myself included- wound up paying substantially more in payroll taxes under Reagan, when you consider the removal of deductions and increases in Social Security & Medicare.

[Zynx]

33. Reagan refused to cut spending because it would hurt him politically.

His tax cuts also didn't reduce taxation as a percent of GDP that much even at first because he got rid of a bunch of credits and deductions.

[The Magistrate]

35. The Reason, Mr. Gay

Is that the wretch did run up the deficeit.

The Congress did not propose or pass budgets larger than those this reptile proposed: the Congress did, on occassion, propose to spend more on programs he wished to cut, and less on programs he wished to expand, and in these instances, the wretch would complain of "budget busting" by the Congress, though the totals of the Congressional proposals were no greater, and generally ran slightly less, than his own. Merely one more example of this creature's use of the "big lie" strategy....

"LET'S GO GET THOSE BUSH BASTARDS!"

[buycitgo]

37. excllent, excellent thread....going to be needed

to counter all the BS about to be spread WRT the economic "miracle" that was the Reagan regime

read On Bended Knee to see how the groundwork for the current regime's handling of the media was laid, and for a partial explanation of why we're up against what we're up against today in trying to get the truth out

also, this thread has some good, concise myth-busting material, in relatively concise bits

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=1730122

[buycitgo]

38. oh, yeah

America: What Went Wrong, and America: Who Really Pays the Taxes, by Bartlett and Steele

also that new book by David Cay Johnston........can't remember the title

[lanparty]

39. Reagan signed it ...

It was a classic guns vs butter debate. Reagan wanted guns. Congress wanted butter. In the end, they stalemated on BOTH.

[Feanorcurufinwe]

41. Similar to the myth that Truman dropped the A-bomb on Hiroshima

in that they are both true.

[ChavezSpeakstheTruth]

42. Exactly, I don't see how anyone could try and pass the 80's deficit on to

It's unbelievable.


Ps - Feanorcurufinwe - good to see we don't disagree on everything :)

[salin]

44. Tell them to go to old govt budget documents

and compare the proposed Reagan White House budgets, to the democratically controlled House budgets to the Senate budgets (half the time republican controlled, half the time democratic controlled).

They will find that each year the budget with the smallest deficit spending... was the democratically controlled house. The middle numbers came from the senate - and the largest deficit spending was always proposed by the Reagan White House. They didn't give a darn about deficit spending.

[seabeyond]

45. he also created that deficit as governor of calif

i suppose it was the democrats fault with that also

[Tatiana]

47. Not only did the moron run up the deficit with obscene military spending

Does no one remember the INFLATION under Reagan???

[Jacobin]

49. RONG

Supply side economics did NOT work. The national debt tripled. Toward the end of his term, he at least admitted it wasn't working and raised rates.